Financial Aid Basics: What All Students Need to Know

By Ryan Laspina
Senior Specialist, Red Flags and External Reviews

Understanding the requirements for financial aid can be complicated, especially for first-time college students. You may have a lot of questions and feel overwhelmed by the process of applying for and receiving financial aid.

Luckily, there will always be school representatives willing to help, such as your school’s Financial Aid Office. This office is one of several great resources for current and prospective students.

Navigating the financial aid process does not have to be difficult, but you should understand that it is a process that requires time and research. Before you start the Federal Student Aid (FSA) process, it is helpful to understand financial aid basics:

1. The three most basic types of financial aid are scholarships, grants and student loans. Scholarships and grants are usually awarded on a merit or need basis; in most cases, they do not need to be paid back to the awarding institution.

Loans are borrowed funds that come with terms and conditions, fees and interest rates. They ultimately require repayment to the lender.

2. The two most common types of FSA loans are unsubsidized loans and subsidized loans. Unsubsidized loans, provided by the Department of Education, accrue interest that the borrower is responsible for paying. Interest begins to accrue when the loan is first disbursed.

Subsidized loans, which are need-based, accrue interest that the government pays while they are in deferment. You must be enrolled at least half-time for the loan to be in deferment and there is no set time when deferment ends.

Also, be sure to check with your loan service provider to ensure you have all of the details about your loan.

3. To determine eligibility for FSA, you must fill out a Free Application for Federal Student Aid (FAFSA) for each award year you attend college. The FAFSA requires a lot of information. It can be intimidating to complete, but a financial aid representative at your school will be more than happy to help you.

4. To gain and maintain FSA eligibility, you must meet the minimum requirements set forth by the U.S. Department of Education. You should also be aware of your school’s policies and procedures for awarding and disbursing aid.

5. FSA is meant to help with educational expenses only. Tuition, fees, room and board, transportation, books, laptops and computer equipment are some of the standard items that can be paid for with financial aid. Vacations, rent, mortgage payments and expensive, non-essential personal items are not considered educational expenses.

Once you gain some literacy in financial aid basics, you can start to look at more in-depth details and your individual eligibility. If you have any other FSA questions, contact a financial aid representative.